The importance of title insurance cannot be overstated when it comes to mortgage loans in California. This vital insurance serves as a safeguard for homebuyers, protecting them against “title claims” such as undisclosed debts associated with previous property owners. But who is responsible for paying for owner’s title insurance in California?
How Title Insurance Works
In California, all real estate transactions are meticulously recorded by government officials. These records can sometimes reveal unpaid debts or other issues related to a property, like mechanics liens or debts associated with bail bonds. Since these issues are tied to property ownership, it’s crucial for homebuyers to be aware of the risks involved.
You are viewing: Who Pays for Owner’s Title Insurance in California?
Buyers naturally desire a property that is free from any encumbrances, aside from mortgage-related funds. This is where title companies play a crucial role. When a buyer purchases title insurance, the title company thoroughly examines all available records associated with the property. Their goal is to identify any potential ownership issues and, if any are found, work to resolve them.
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Even with a rigorous search, there may be cases where issues arise after the homebuyer has already purchased the property. This is when having a title insurance policy becomes essential. Homebuyers encountering these problems can be grateful for the protection provided by title insurance.
Buyer or Seller: Who Pays for Title Insurance?
The question of who pays for title insurance in California – the buyer or the seller – can vary from one transaction to another. However, it is generally customary for the buyer to bear the cost of title insurance. This includes insurance for the lender as well as the buyer. Like many closing costs, these expenses can be negotiated between the buyer and the seller.
To summarize, there are two main types of title insurance policies:
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The lender’s policy: This policy is typically required when the transaction involves financing. It protects the lender or bank until the loan has been paid off or refinanced.
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The owner’s policy: The buyer pays for this policy, which is usually optional. In most cases, the cost of the owner’s title insurance policy is a one-time payment, and the coverage remains in effect as long as the homeowner owns the property. While there may be some variation in the specifics, this is generally how this coverage functions.
According to the American Land Title Association:
“An Owner’s Policy is typically issued in the amount of the real estate purchase price and remains in effect for as long as the owner, or their heirs, retains an interest in the property. In addition to identifying risks before a transaction is completed, the Owner’s Policy will cover valid claims and all defense costs against attacks on the title.”
This article has provided a basic understanding of title insurance and addressed the question of who pays for title insurance in California. For any further inquiries about title insurance in California or other mortgage-related questions, don’t hesitate to contact one of JVM Lending’s knowledgeable Client Advisors. You can reach our team seven days a week by phone at (855) 855-4491 or by email at [email protected]
Source: https://t-tees.com
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